Celsius Allowed to Proceed with Flare Token Distribution

  • Due to Celsius’ prior agreement with Flare, the U.S. bankruptcy court has authorized the crypto lender to credit eligible account holders with the FLR they were entitled to.
  • During the Tuesday hearing, Celsius’ lawyers proposed a new plan to reorganize the company, and issue a new token that would entitle its holders to receive dividends over time.
celsius

Shutterstock

Troubled crypto lender Celsius has received permission from the bankruptcy court to distribute Flare’s network token (FLR) to eligible account holders, a court order filed on 24 January revealed.

According to the document, Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York has authorized the bankrupt crypto lender to credit eligible account holders with the FLR they were entitled to. Flare — a Layer 1 blockchain and oracle provider — distributed FLR tokens to anyone who held at least one XRP token during a December 2020 snapshot.

Celsius — which itself qualified to receive 150 million of the tokens — had a grant distribution agreement with Flare, meaning that customers who held XRP within their Celsius accounts at the time of the snapshot were also expected to receive tokens. The crypto lender, however, filed for Chapter 11 bankruptcy last July, and now needed the approval of the court to grant the tokens to eligible account holders.

Judge Glenn also authorized Celsius to return funds transferred to the crypto lender after it had filed for bankruptcy in the form of crypto “net of any gas fees or transaction costs”. If a withdrawal exceeds $40,000 — and the customer received over $200,000 from Celsius during the three months leading to its bankruptcy — the appointed committee of creditors will need to give its approval first.

During the Tuesday hearing, Celsius’ lawyers proposed a plan to reorganize the company into a “publicly-traded company that is properly licensed”, claiming that this would return more value to creditors than simply liquidating its assets. If this plan gets approved, Celsius will issue a new token — that will reflect the value of the assets managed by the company, and entitle holders to dividends over time — to creditors with locked assets above a certain threshold, while the rest will receive a one-time distribution of liquid crypto.

Discussion
Related Coverage
FTX, Alameda Wallets Move $13M to Exchanges
  • A little over $13 million in altcoins were sent to crypto exchanges Binance and Coinbase in the past 24 hours, which is in accordance with a September court order.
  • The court ordered a phased liquidation process, which allows the bankruptcy estate to sell $3.4 billion worth of digital assets over a certain period of time.
November 1, 2023, 2:27 PM
ftx

Shutterstock

NY Attorney General Sues DGC, Genesis, and Gemini for Fraud
  • An investigation from the New York Attorney General’s office has allegedly found that Gemini was aware of Genesis’ weak financial position, but still lied to investors.
  • The lawsuit is looking to ban DCG, Genesis, and Gemini from the New York financial industry, seek restitutions for investments, and the return of “ill-gotten gains”.
Celsius Seeks Court Approval on Restructuring Plan
  • The bankrupt crypto lender said that if its reorganization plan is approved, it is ready to start repaying its customers using $2 billion in BTC and ETH by the end of the year.
  • If given the green light, Celsius will restart its business under the “NewCo” brand without any funded debt, and with seed funding of up to $450 million.